European energy dependency to increase?

Timon Singh

In the past, EU Infrastructure has discussed how reliant Europe's gas supplies are on Russia and how the continent needs to diversify its energy supplies. However, today comes news that European energy dependency could increase, with a European Commission Green Paper predicting Europe could get as much as 70 percent of their energy supplies from external sources over the next years.

Already, Europe's energy supplies (namely gas) come predominately from Russia who, depending on your sources, provides us with almost half of the our natural gas imports and 30 percent of our oil supplies. The Middle East meanwhile accounts for 40 percent of our oil imports. While this may not be a massive revelation to anyone, increased investment in renewable forms of energy would have hoped that this figure might be slowly reducing or at least holding steady. So why the increase?

Firstly, energy security has been a major concern for European states for a long time, especially for those who don't wish to be reliant on Russia. While Brussel's plan to diversify gas supplies by funding the Nabucco Pipeline may have had merit, poor planning and increased investment on Russian pipelines has essentially seen the project die. As such, Russia is set to continue supplying our gas, a commodity that we are utilising with increasing frequency.

Increased demand

According to the IEA, global gas demand is expected to increase from 3 trillion m3, as seen in 2007, to 4.3 trillion m3 by 2030. As such many countries are seeing Russia projects like South Stream and Nord Stream as national necessities despite the increase external reliance. As such, some European countries have been endorsing the Russian pipelines despite the EU-backed Nabucco project.

Many have sided with Russia for a number of reason, but reliance seems to be the main one. Russia holds the largest reserves of natural gas in the world. In second place is Iran - hardly the most stable regime, and not really the easiest to negotiate with. If exports were to come from there, there are security concerns that many countries cannot ignore. As such, the mindset appears to be that of "better the devil you know".

For Russia as well, it is good financial sense and gas giant Gazprom is expected to spend US$6.17 billion on European projects over the next five years. With projects such as Shtokman field and developments on the Yamal peninsula, Russia is ensuring that if there is a demand, then they'll definitely have the supply.

What about Norway?

How Europe does have an alternative - Norway. The Nordic country recently overtook Canada as the world's second largest natural gas exporter due to developments of Ormen Lange and Snohvit. Ideally placed, there is no reason why Norway couldn't become a secure source of energy for the EU, especially as only a third of the country's continental shelf have been explored.

Not just that, but there are also possibilities for gas reserves in and around Greenland and the North Sea. Of course, the recent disaster in the Gulf of Mexico may have hampered offshore drilling projects, giving the advantage once more to Russia who have plenty of gas fields in-land.

That only leaves renewable energy, and while the likes of France, Germany, Spain and the UK are investing in the likes of solar and wind power, the result isn't enough to replace fossil fuels. It seems a massive shake up of the energy sector is needed, or a form of breakthrough technology that will wean the continent off foreign fossil fuel permanently.

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The rivals to Russia's oil reserves | The future of Europe's gas infrastructure | Europe's natural gas futures